Community Currencies and Time Banking

My recent guset onVoices from the Northwas Rebecca Ranum. We spoke on community currencies and Time Banking. Rebecca belongs to the Kaitaia Transition Town Inititiative and the following words summarize our discussion. I have modified and edited words kindly provided to me by Rebecca. The complete interview is found below:

TTK history: Transition Towns is a global, grass roots initiative that aims to build sustainable communities that can cope and even thrive when oil gets more expensive, when we are hit with further economic recession and/or when climate change makes it harder to grow food in some areas of the world. The bottom line for transition towners is food security. The Kaitaia TT group started in 2008 after a public meeting at the Little Theatre where then Green M.P. Nandor Tanczos spoke.

Relocalisation is a central aim for Transition Towns and creating local currencies is part of this. In April last year Rebecca attended a community currency conference in Wanganui where she found out about Time Banking for the first time. She was really inspired by the idea and came back to Kaitaia keen to do something. After a public meeting about community currency, a group of half a dozen people was formed to look at setting up an community currency system in Kaitaia. From all the different community currency systems available, the group opted for time banking. But first, let’s take a look at some of the other options that are available and currently in place around the world.

Community Currency Overview

Community currencies are complementary currencies. They are not meant to be an alternative for the national currency (i.e. NZ dollars), but are meant to be used alongside it. Community currencies are designed to meet needs in the community that are not served by the national currency.

Complementary Regional Currencies

Each region of a country has its own economy. Some of what we buy is grown or made locally, while the bulk of the labour is local. Some of the services we pay for (like our dentist’s or hairdresser’s time) have no connection to national or global business. In any regional economy there may be between 20% and 35% local autonomy. These goods and services could be paid for using a regional currency working in parallel with a national currency.

Potential benefits of regional interest free money

Increased local control of the economy

Reduced unemployment

Higher standard of living

Reduced levels of personal, business and council debt

Encourage new business into the region

In Germany, a successful regional currency is operating in the Chiemgauer district of Bavaria. An economics teacher and some senior students launched the scheme in 2003. Chiemgauer coupons have a hologram, a serial number and two signatures.There is a club card, identifying members of the association they had to form to avoid prosecution from financial authorities.

Retailers accepting chiemgauer can only redeem them for 95% of their value, as 2% goes to the students for administration of the programme and 3% goes to a local charity of the merchant’s choice.

Coupons are only valid for three months and come with an expiry date. This gives people an incentive to pass them on quickly and keep the currency circulating. They are not designed to be saved. Coupons are bought into circulation i.e. 50 Chiemgauer coupons are bought for 50 euros.

So this scheme is designed to be good for local economic development and prevents money from going out to the big cities. It stays in the district instead. A certain amount of national currency is therefore taken out of circulation and replaced with a currency only valid in the region.

There is a fair bit of time and expense in setting up a regoinal currency as the coupons need to be printed to a standard where they cannot be easily counterfeited and a considerable amount of publicity, marketing and administration is required.

LETS/green dollars

LETS is a mutual credit system that works with accounts that all balance to zero within the whole of the system. Basically you get paid in credits for providing goods or services and your account gets debited as you ‘spend’ your credits. Most LETS are run using accounting software. In 1989 there were 60 LETS in NZ, currently there are about a dozen still operating around the country. LETS can be very useful in times of widespread unemployment. LETS in NZ have declined since the late 1980’s as the economy has improved. There is a new LETS that has just started in the Bay of Islands area called the BOICE. They have about 50 members so far and are about to launch their own paper currency called the Bay of Islands Dollar. They may have to change the name of their vouchers as you can get into trouble with the Reserve Bank of NZ by including the word “dollar” in the name of your currency. The Wairarapa Community exchange have also issued their own paper currency called the WAI. In the future, it may be useful for our local economy, to have a LETS in Kaitaia.

Loyalty cards

Flybys is a complementary currency. You gain loyalty points for shopping at certain retailers which you can then spend on a variety of products. In Upper Hutt they have a similar system for rewarding people for shopping locally called the Upper Hutt X-card. When you have a local scheme, local points encourage local spending. Rather than money leaving the town and moving to larger towns and cities, the money stays in the local economy.

A local currency such as the Upper Hutt X-card is the only way that local businesses can genuinely promote ‘Buy Local’.

Why We Need Community Currencies

The current debt based monetary system is very unfair and is arguably the reason for the ongoing destruction our planet. Constant growth is needed to keep the system functioning. Constant economic growth requires the increasing use of natural resources. Humanity is now coming up against the limits of the earth’s resources so our current monetary system just cannot continue as it is. Almost every country in the world uses and is part of the same flawed monetary system. We can make money work better in our own small part of the world by designing and using complementary currencies that meet our needs as a community.

At the heart of the money shortage is a monetary system that drives exponential growth, of everything! Exponential growth cannot be sustained on a planet with finite resources. The shortage of money comes about because most of the money we use has been created by commercial banks as interest bearing debt. Since the principal has been created but not the interest, people and firms are obliged to compete with one another to find the money to pay the interest, causing some at least to go further into debt, and putting enormous pressure on natural resources.

Each year the total money supply must increase by at least the amount of interest demanded, increasing the debt burden in every indebted sector – company, credit card, student, mortgage, and hire purchase. To recoup the interest on debts, businesses build into their prices a percentage for interest. The result is that those who are net debtors pay more on the combination of their shopping baskets and their debt than they can ever earn from interest on their savings or investments. One result is that money is constantly being transferred from the many net debtors to the few net creditors, widening the gap between rich and poor.

Where Time Banking fits into the community currency landscape

In the past people had a variety of currencies to chose from – local, regional and national and that is likely to be the way of the future also. Time banks are a complementary currency that improve the social economy. A time bank is a community system where people’s time and skills are the currency rather than money.

Time banking differs from LETS or green dollarsin that everyone’s time is valued equally with time banking. Because of this it is not attractive to people with skills that are worth a more per hour than the minimum wage. Time banks have a community chest facility so people who are not able to contribute for whatever reason can still obtain help through a time bank. Some time bank members ‘donate’ their time to the community chest which is similar to traditional volunteering.

The main purpose of time banking is not to save money, it is for growing social infrastructure. Time banking can help to save money or put another way – it gives people access to services they just would not get otherwise, but this is not the most important aspect of time banks. There are some things you can get through a time bank that you cannot buy with money e.g. companionship, care and a support network.

The reason the Kaitaia group chose Time Banking above the other community currencies is because you don’t need any special skills to be part of a time bank, anyone can participate and everyone is valued equally. It is this inclusiveness and equality that appealed to the Kaitaia group. Eventually it would be ideal to have a LETS in Kaitaia as well as a time bank because LETS are designed to keep the economy moving when everyone is short of cash. People can see an immediate need for time banks but the need for a LETS is not seen as urgent just now. If there was a more general shortage of cash in the community and widespread unemployment – then a LETS is likely to take off.

Who benefits from a Time Bank:

Time banking is for anyone who could do with a stronger social network around them e.g. do you have people to call on to: baby sit your children, help if you are sick, drive you somewhere, help you with computer problems, go shopping with you, confide in, help with parenting, give relationship advice, fix your broken fence, advice on buying a home/property, health advice etc People with very good social networks probably don’t need time banks. Many of the problems in our society stem from inadequate or dysfunctional social networks. The whole community benefits when people are able to get the help they need within their own networks. Time banking strengthens people’s social and support networks.

Many people are reluctant to ask for help or to accept help from others. Some people feel they have nothing of value to give others. Many skilled people are too busy to help others or contribute to community projects if this time cannot be recouped somehow – hence the general downturn in volunteering. Being part of a time bank helps to overcome these barriers. Our time bank started trading a few months ago and already we have found this has created a stronger network amongst our group that did not exist before. People build trust as they trade with other time bank members and the circle of people you can call on when you need help increases. People feel more comfortable asking for help when they have ‘credit’ in the bank or know they can repay the bank for help received.

Community groups can be time bank members. People doing volunteer work for a community group can be paid in time credits e.g. for going door to door collecting money for a charity, taking part in a working bee to maintain a community hall or mentoring a young person. The community group may obtain time credits for example by allowing time bank members to use its facilities or offering courses that can be paid for in time credits. Time credits for use by a community group can also come from the community chest. Time bank members are given the option of giving some or all of their time credits to the community chest in order to support community projects.

Examples of trades from time banks

Kids earn time credits for taking an elderly neighbour’s rubbish out to the kerbside each week and spend credits watching a special tv programme on another neighbours big screen TV

Time credits earned by making soup for community group meetings, are spent getting gutters cleaned out

Time credits earned by tutoring a child having difficulty with reading are spent being taken shopping

People get time credits for helping out with working bees at Te Mara Rongoa Marino, a community rongoa garden.

Older, experienced gardeners could get time credits to mentor younger gardeners

Use your credits to get a group of time bank members to do a working bee at your home or someone else’s home (you can use your time credits to get things done for other people).

People taking part in health or social programmes could be paid time credits to put in the essential ‘work’ required to meet goals e.g. taking part in an exercise programme to improve overall health or attending a parenting programme.

How people join the Kaitaia Time Bank:

– Register online, by telephone or at the Age Concern office on a Monday or a Friday (between 10am and 2pm)

– attend an orientation session at REAP

– fill out your profile, view other members profiles and start trading.

“In Search of Simplicity is a unique and awe-inspiring way to re-visit and even answer some of the gnawing questions we all intrinsically have about the meaning of life and our true, individual purpose on the planet. I love this book.”

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4 Responses to “Community Currencies and Time Banking”

“Time banking differs from LETS or green dollarsin that everyone’s time is valued equally with time banking.”
Jct: Nice article but nothing constrains a dentist or mechanic in the Ithata Hours from charging more Hours per hour than others except where they don’t use paper notes and the central controllers can police all transactions that must be registered with the central computer.

A true currency circulates as it represents a “unit of account” that has an intrinsic stored value that is accepted in the marketplace. For example take a look at WIR Bank in Switzerland, an excellent example of a complementary currency.

Have spent 9-months with a group tryin g to set-up a Time Bank in UK. BUT came across several fundamental stumbling blocks. Have concluded that like the Tipperary Time Bank Report sadly that its is not practical. Too idealistic.

Administration is too complex and expensive to support.

Sadly Human Greed also soon showed another major flaw. Not everyone values their time as being equal to anyone elses hour! Just ask a lawyer or medic if they will accept a Time Credit hour for an hour?